Our semi-annual look at the top climate change legal stories is keyed on EPA. You hardly have to have been awake to be aware of the Clean Power Plan and UARG v. EPA. But other things have stirred the pot as well: three reports – two by the Intergovernmental Panel on Climate Change and the other by Standard & Poor’s, and two climate change lawsuits – one by Illinois Farmers Insurance Company and the other by Biscayne Bay Water Keeper.

1. The Clean Power Plan - On June 6 EPA issued a 600+ page proposal directed at controlling carbon dioxide emissions from operating power plants. By June 2016 States are required to submit plans for such control (there is also an option for extending the due date if more time is needed). EPA’s press release summarizes what is supposed to happen:

The Clean Power Plan will be implemented through a state-federal partnership under which states identify a path forward using either current or new electricity production and pollution control policies to meet the goals of the proposed program. The proposal provides guidelines for states to develop plans to meet state-specific goals to reduce carbon pollution and gives them the flexibility to design a program that makes the most sense for their unique situation. States can choose the right mix of generation using diverse fuels, energy efficiency and demand-side management to meet the goals and their own needs. It allows them to work alone to develop individual plans or to work together with other states to develop multi-state plans.

Thus, the learning that has gone on over the past several years as embodied in RGGI, AB 32, RPSs and other state initiatives is going to have an opportunity to prove itself.

2. UARG v. EPA - The Supreme Court has now weighed in on climate change three times: Massachusetts v. EPA, Connecticut v. American Electric Power and, this past month, Utility Air Regulatory Group v. EPA. – Readers will remember the D.C. Circuit’s 2012 ruling in favor of EPA defeating challenges to the Endangerment Finding, the Tailpipe Rule, the Timing Rule and the Tailoring Rule. UARG was a limited appeal of that decision and accomplished nearly all that EPA required. At the end of June the Supreme Court affirmed EPA’s greenhouse gas regulatory program, with the exception of rules focused on a small group of emitters. How small? Before UARG EPA estimated its rules would reach 86% of GHG emissions. After UARG EPA can reach only 83%. In a nutshell, EPA has authority under the Clean Air Act to impose GHG emission regulations on major emitters already subject to regulation. This bodes ill for those seeking to challenge the Clean Power Plan.

3. Climate Science - The science continues to mount demonstrating the effects of climate change. In two more contributions from the Intergovernmental Panel on Climate Change, Working Group II lays out in Climate Change 2014: Impacts, Adaptation, and Vulnerability “how patterns of risks and potential benefits are shifting due to climate change.” The report also assesses how “impacts and risks related to climate change can be reduced and managed through adaptation and mitigation.” In Climate Change 2014: Mitigation of Climate Change Working Group III “respond[ed] to the request of the world's governments for a comprehensive, objective and policy neutral assessment of the current scientific knowledge on mitigating climate change." The two reports complement Working Group I’s report released last year, which concluded: “It is extremely likely that human influence has been the dominant cause of the observed warming since the mid-20th century.”

4. Climate Risk - It has been a common theme for this blog that acceptance of climate change will occur not because of science, but because of the responses of business entities that recognize that climate change denial is not in their best interest. But it is also a theme that until there is an actual identified business reason to take an action, businesses will not go out on a limb. Standard & Poor’s exemplifies our thinking. In March it issued a short report, Climate Change is a Global Mega-Trend for Sovereign Risk. In the report S&P concludes “the evidence suggests that it is probably safe to expect that for most national economies, other things being equal, climate change will negatively impact national welfare and economic growth potential. Observations corroborating this expectation could lead Standard & Poor’s to lower sovereign ratings on the most affected sovereigns.” That is, “we see a potential problem but we aren’t ready to act just yet.” Notwithstanding S&P's failure to move today, this pronouncement does communicate to the buyers of sovereign debt that they had better pay attention to climate change as it may be material to their investment.

5. Illinois Farmers Insurance Co. v. The Metropolitan Water Reclamation District of Greater Chicago - It didn’t take Illinois Farmers long (less than 60 days) to drop its lawsuits against dozens of municipalities and other government entities alleging negligent management of stormwater. The central feature was the claim that the government entities were on notice of the effects of climate change and did not incorporate them into their stormwater planning. We presume the entities’ sovereign immunity defense persuaded Illinois Farmers to go quietly in the night. But the insurance company has competent lawyers and sovereign immunity surely was no surprise. So, was this the proverbial shot across the bow, putting government, and the entities that serve government – the design and engineering firms – on notice that climate change had better enter into their forecasts or they will be pursued for negligence? Time will tell.

6. U.S. v. Miami-Dade County - Miami-Dade’s sewer insfrastructure is falling apart and EPA compelled the city into a consent order under the Clean Water Act to get things cleaned up. Enter the intervenor, Biscayne Bay Waterkeeper, who insisted that the consent decree was improper as it did not take rising sea levels caused by climate change into effect. Federal district court judge Federico A. Moreno considered the consent decree and rejected it because it lacked sufficient incentive for the county to abide by the decree. The court did not mention BBWK’s concern. Nevertheless, Miami-Dade appears to have gotten the message that it needs to be paying attention. The county has a task force devoted to sea level rise and it is preparing a report with recommendations. This is from the April 28 minutes of the task force:

Chairman Ruvin said that sea level rise was inevitable, and to ensure that the community remained insurable, it was important to begin implementing a plan to address this issue. … Chairman Ruvin noted the Task Force members had heard enough information to understand the necessity of developing a plan to address sea level rise. He said that there were global engineering firms with entire divisions devoted to sea level rise, and suggested that the County conduct a competitive process to retain the services of some of these firms to develop this plan.

It remains to be seen, of course, whether the task force's recommendations will be accepted.

2013 has drawn to a close; here is our take on the top six climate change legal stories in the last six months.

1. Climate Change Assessments - Blockbuster legislation may have been evaded once more but that has not stopped those in the trenches. Assessments of climate change risk are becoming more routine. For example, the September 2013 Record of Decision for the Gowanus Canal Superfund Site required assessment of “periods of high rainfall, including future rainfall increases that may result from climate change” in implementing certain aspects of the cleanup remedy. Another example was provided by the Department of Housing and Urban Development, which in November required in its second round of community block grants for disaster relief that prospective grantees consider in their Comprehensive Risk Analysis “a broad range of information and best available data, including forward-looking analyses of risks to infrastructure sectors from climate change and other hazards, such as the Northeast United States Regional Climate Trends and Scenarios from the U.S. National Climate Assessment, the Sea Level Rise Tool for Sandy Recovery, or comparable peer-reviewed information." Even the Nuclear Regulatory Commission looked at climate change with regard to its September draft generic environmental impact statement for the long-term continued storage of spent nuclear fuel.

2. Low Carbon Fuel Standards - In Rocky Mountain Farmers Union v. Corey the Ninth Circuit reversed several district court rulings limiting under the “dormant Commerce clause” the California Air Resources Board’s Low Carbon Fuel Standard. Although the Commerce clause of the Constitution, U.S. Const., art. I, § 8, cl. 3. “does not explicitly control the several states,” it "has long been understood to have a ‘negative’ aspect that denies the States the power unjustifiably to discriminate against or burden the interstate flow of articles of commerce.’” Rocky Mountain at 31 (citation omitted). California’s Low Carbon Fuel Standard supported carbon dioxide emission reduction “by reducing the carbon intensity [i.e., the amount of carbon dioxide emitted per unit of energy produced] of transportation fuels that are burned in California.” It thus potentially burdened producers of ethanol in the Midwest and petroleum producers outside California, but that did not matter. Specifically, the court held that the LCFS was not facially impermissibly discriminatory in favor of ethanol, was not improperly extraterritorial and did not discriminate against petroleum fuels. Accordingly, California is still on its path to a reduction in the carbon intensity of its fuels by 10% by 2020, as mandated by the 2006 Global Warming Solutions Act.

3. The Cost of the Grid - On November 14, the Arizona Corporation Commission ruled that Arizona's net metering program should spread the cost of maintaining a reliable grid among all of Arizona Public Service's customers, including its rooftop solar customers. Up to that point rooftop solar customers were paid for the electricity they provided to the grid at retail rates, without any adjustment for the cost of the grid. The Commission concluded that this resulted in a "cost shift" from customers that were paying for the grid, to rooftop solar customers, who weren't. APS put on a good case demonstrating that rooftop solar customers were substantially benefitting from the grid by drawing power at night, during cloudy weather and during the periods of daylight when solar power production did not exceed the customer's needs. Many have criticized solar power as unfairly subsidized. In Arizona at least, one of those subsidies is being addressed.

4. New Carbon Dioxide Emission Standards - Following over 2.5 million comments, EPA rescinded its proposed rule governing carbon dioxide emissions from new coal-fired power plants. In its place it proposed on September 20 a rule setting CO2 emission standards for new large natural gas power plants (1,000 lbs/MW-hr), new small natural gas power plants (1,100 lbs/MW-hr), and new coal-fired power plants (1,100 lbs/MW-hr). From our perspective, the most significant facet of this new rule is that it actually will apply to plants that are being built. The withdrawn proposed rule only applied to new coal plants, which EPA concluded would not be built anyway before 2030. Equally significant, as pointed out in EPA’s news release on the proposal, is that “EPA has initiated outreach to a wide variety of stakeholders that will help inform the development of emission guidelines for existing power plants.”

5. The Fifth Assessment Report of the Intergovernmental Panel on Climate Change – The IPCC’s Working Group I issued The Physical Science Basis, its part of the Fifth Assessment Report. Working Groups II and III will publish in 2014. Among other things WG I concluded: "Unequivocal evidence from in situ observations and ice core records shows that the atmospheric concentrations of important greenhouse gases such as carbon dioxide, methane, and nitrous oxides have increased over the last few centuries." "The temperature measurements in the oceans show a continuing increase in the heat content of the oceans. Analyses based on measurements of the Earth's radiative budget suggest a small positive energy imbalance that serves to increase the global heat content of the Earth system. Observations from satellites and in situ measurements show a trend of significant reductions in the mass balance of most land ice masses and in Arctic sea ice. The ocean's uptake of carbon dioxide is having a significant effect on the chemistry of sea water." But if one remains skeptical, this consensus view of the world’s leading climate scientists should not cause one alarm, the climate change skeptics have not thrown in the towel. For example, according to one website, “climate science as proclaimed by the IPCC is a morass where what is scientific knowledge cannot be easily separated from speculation and what is wrong.” One won't find seafarers plying the Northern Sea Route in the skeptic camp, however. Russia logged a record year of transits in 2013 (over 200), up from just 4 in 2010.

6. Climate Change Liability Lawsuits - For the first time since 2005, when Comer v. Nationwide Mutual Insurance was filed, there is no climate change liability lawsuit on the docket anywhere. All have been defeated. Comerwas the last to succumb, with its opportunity to file a petition for certiorari expiring on or about August 14. The IPCC Fifth Assessment establishes climate change is not going away, but we will have to wait to see if anyone is going to attempt to make someone pay for it.

Another six months have passed and it is time for our semi-annual look at climate change and its intersection with the law. Here are some highlights of the last six months:

1. The Administration’s Focus. After months of silence in the 2012 presidential campaign, President Obama rejuvenated his administration’s commitment to addressing climate change. We heard in his inaugural address: “We will respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations. Some may still deny the overwhelming judgment of science, but none can avoid the devastating impact of raging fires and crippling drought and more powerful storms.” He carried this forward in his State of the Union address less than a month later: “I urge this Congress to get together, pursue a bipartisan, market-based solution to climate change, like the one John McCain and Joe Lieberman worked on together a few years ago. But if Congress won’t act soon to protect future generations, I will. (Applause.) I will direct my Cabinet to come up with executive actions we can take, now and in the future, to reduce pollution, prepare our communities for the consequences of climate change, and speed the transition to more sustainable sources of energy.” And in a speech this past Tuesday the promises took another step toward reality when the President outlined his “climate action plan.”

Recognizing the logjam in Congress, the Administration's plan is based on authority the executive branch already has. The salient points include: 1) further restrictions on powerplant greenhouse gas emissions (notably addressing coal); 2) promotion of resilience and adaptation with respect to weather-related calamities; 3) additional permitting of renewable energy facilities on public lands; and 4) engagement in the international arena on climate change such as working out a global free trade agreement on clean energy technologies. The goal is a reduction of U.S. greenhouse gas emissions by 17%. The Wall Street Journal called these “sweeping climate policies.” We will see; with no new authority, Gina McCarthy’s nomination to head EPA held up, and the bounty of natural gas unleashed by fracking, greenhouse gas reduction may be achieved by the market, see Leveraging Natural Gas to Reduce Greenhouse Gas Emissions, not governmental efforts.

2. 400 PPM. On May 9, Mauna Loa Observatory of NOAA’s Earth System Research Laboratory reported that the average weekly value of atmospheric carbon dioxide at the observatory had reached 400 ppm, a level unsurpassed in 3 million years. The world collectively ignored the number, treating it more like an insignificant decimal, 0.0004, which it was (a decimal, not insignificant). We don’t think anyone will dispute that there are three ways to interpret this number: it’s bad, it’s good, it’s neither. Climate scientists are unanimous that it’s bad. There is nothing saying it’s good. Which means the justification for not taking action on climate change is that the ever increasing levels, and the ever increasing rate of accumulation, of carbon dioxide in the atmosphere (see the graphs by the observatory), are of no consequence. US Airways will probably side with the climate scientists - it canceled 18 flights as a result of the record-breaking temperatures in the southwest this past weekend.

As a footnote, we note that Mauna Loa’s number is an average, and is subject to refinement. As it turned out, the 400 ppm number was refined a few weeks later to 399.89.

3. Free Trade. In 2009 Ontario enacted its Green Energy Act to promote renewable energy in the province. One approach is the adoption of a feed-in tariff (mandatory above-market rates for electricity derived from renewable resources). This had successfully been pioneered in Germany. Ontario legislators also saw the opportunity to spur job growth by giving subsidies to businesses that sourced their wind turbines and solar panels in Ontario (i.e., “domestic content”).

Japan jumped on this protectionism immediately and sought consultations with Canada under the General Agreement on Tariffs and Trade and the World Trade Organization. The consultations were ineffective and Japan requested a panel to hear the dispute concerning Ontario’s “domestic content requirements," with which renewable energy generators were required to comply "in the design and construction of electricity generation facilities in order to qualify for guaranteed prices” under the feed-in tariff program.

Last December the panel ruled in favor of Japan on the domestic content requirements. Canada appealed and this May the appellate panel affirmed. Ontario's energy minister has confirmed that Ontario will abide by the WTO decision and revise its Green Energy Act. We conclude that free trade remains colorblind.

4. Climate Change Liability Lawsuits. For seven years now, the first wave of climate change liability lawsuits have roiled the legal waters. It bears remembering that in October 2009, the plaintiffs in these cases rode the crest of the wave. The Second Circuit had reversed the trial court’s dismissal in Connecticut v. American Electric Power (AEP), and the Fifth Circuit likewise overturned the Southern District of Mississippi’s dismissal of Comer v. Murphy Oil USA. Plaintiffs had standing; the political question doctrine did not apply.

Things have gone badly for the plaintiffs since. All readers of this blog know of the Supreme Court’s decision in AEP, stifling the plaintiffs’ case under the doctrine of displacement. This year two more decisions confirmed the Judicial Branch’s hostility to these claims. Comer made it back to the Fifth Circuit, where dismissal was summarily affirmed on the doctrine of res judicata. And the last of the original quadriga, Native Village of Kivalina v. ExxonMobil Corp., found its petition for certiorari denied in April, thus leaving the Ninth Circuit’s affirmance of dismissal unchanged.

The only reed left for the plaintiffs is the granting of a petition for certiorari in Comer, a prospect we deem unlikely, if only because the appeal would be based on a purely procedural question of little likelihood of being repeated and of little relevance to the larger climate change issues.

5. Ursus Maritimus. On March 1 the D.C. Circuit in In re Polar Bear Endangered Species Act Litigation affirmed the district court’s dismissal of challenges to the Fish and Wildlife Service’s designation of the polar bear as threatened under the Endangered Species Act because “due to the effects of global climate change, the polar bear is likely to become an endangered species and face the threat of extinction within the foreseeable future.” The polar bear’s friends (environmental groups) sought to have the bear listed as “endangered.” Ursus maritimus’s less-than-friends (the State of Alaska and hunting groups), urged that no listing was appropriate. The standard in such reviews is relatively simple: “Our principal responsibility here is to determine, in light of the record considered by the agency, whether the Listing Rule is a product of reasoned decisionmaking.” The Court found that it was, holding specifically the the Listing Rule rests on a three-part thesis: the polar bear is dependent upon sea ice for its survival; sea ice is declining; and climatic changes have and will continue to dramatically reduce the extent and quality of Arctic sea ice to a degree sufficiently grave to jeopardize polar bear populations. See Listing Rule, 73 Fed. Reg. at 28,212. No part of this thesis is disputed and we find that FWS’s conclusion – that the polar bear is threatened within the meaning of the ESA – is reasonable and adequately supported by the record.”

As arctic resource development progresses as the ice retreats, the polar bear's Endangered Species Act listing is sure to take on larger significance, both as a model for the preservation of other arctic species, and as a tool to block development.

6. Compressed Natural Gas (CNG). On June 13 the Fifth Circuit affirmed the district court's decision in Association of Taxicab Operators USA v. City of Dallas. In the case the local taxicab organization challenged a city ordinance that allowed CNG-fueled taxicabs “head-of-the-line” privileges at Love Field in downtown Dallas. Plaintiff's theory was that section 209(a) of the Clean Air Act, which prohibits states and their political subdivisions from adopting emission standards for motor vehicles, preempted the ordinance either directly or by implication. The Fifth Circuit did not agree. Traditional police powers of the state were preserved to the state by section 209(d) of the Clean Air Act. More importantly, an ordinance granting head-of-the-line privileges, on its face did not set an emission standard, as required by the statute. As to any implied preemption, the ordinance may have influenced taxicab operators to alter their behavior, but it did not compel them to do so. Less than 7% of Dallas's taxicabs served Love Field and the only place CNG cabs had head-of-the-line privileges was at Love Field; there were plenty of other places for gasoline powered cabs to pick up fares. Accordingly implied preemption did not apply either.

One of our themes in a world beset by climate change is that there will be winners and there will be losers. Little did taxicab operators know they would be both.

2012 has drawn to a close. We chronicle here six of the most significant stories on the climate change front in the last six months. For those looking for hope that government is taking action to rein in greenhouse gas emissions, the focus is on California, where cap-and-trade stepped into reality with California's first emissions auction. Nationally and internationally regulation is at a standstill or going backward. In the courts, the climate change liability plaintiffs were pounded again as the Ninth Circuit confirmed the dismissal of Native Village of Kivalina v. ExxonMobil Corp. Responding to climate change, however, is a different story. Superstorm Sandy was a wakeup call on adaptation and the impacts of extreme weather; the National Flood Insurance Program managed to obtain statutory authority to include climate change in its considerations.

1. Superstorm Sandy – Climatologists are confident that the changing climate will lead to more frequent and more severe storms. Sandy, following Hurricane Irene the previous year, delivered on both predictions. A nine-foot storm surge at Battery Park. Transformers exploding and putting Manhattan into darkness. The Hoboken PATH station submerged. $50 billion in damage. Superstorm Sandy set records and was completely consistent with the concerns of proponents of climate change mitigation and adaptation. Did it have anything to do with climate change or was it simply a chance confluence of events? The weather pattern was unusual. There was a hurricane (albeit fading), coupled with a nor’easter, intersecting with an arctic high pressure front, under a full moon. Individually, those are independent of climate change. But there was also a record lack of sea ice, which has a measured and observed effect on global atmospheric circulation, which could result in severe weather coming together more severely. So quite possibly Sandy is a result of climate change. More important than the academic debate, however, is the impact on adaptation. Regardless of one’s views on climate change, Sandy demonstrated that a major metropolitan area is vulnerable to extreme weather. Steps will be taken to flood-proof subways, bury electric lines, raise seawalls, improve evacuation plans and emergency response, etc. All of these are part of the steps needed to adapt to climate change. Whether it is acknowledged as linked to climate change or not (but see Bloomberg Business Week cover following Sandy: “It’s Global Warming, Stupid!”), adaptation is going to happen.

2. Presidential Election - Climate change was an important part of the campaign: "The Obama-Biden cap-and-trade policy will require all pollution credits to be auctioned, and proceeds will go to investments in a clean energy future, habitat protections, and rebates and other transition relief for families." The 2008 election campaign that is. It was a completely different position in 2012. Or maybe not different at all. No one could tell because nobody was talking about it. Even Sandy wasn't enough to propel climate change into the debate in the last week of campaigning.

3. Native Village of Kivalina v. ExxonMobil - The last filed of the original quartet (American Electric Power, General Motors, Comer, and Kivalina) of climate change nuisance cases, Kivalina finally made it to a federal appellate court, where in September it met the same fate as its brethren: dismissal affirmed. Plaintiffs asked for rehearing. The Ninth Circuit wasn't interested. As of this writing, the only case left is Comer v. Murphy Oil USA, which is on appeal following its dismissal last March (for the second time) by the Southern District of Mississippi. According to that court, plaintiffs lose for a wide variety of reasons: standing, political question doctrine, res judicata, collateral estoppel, displacement, statute of limitations and proximate cause.

4. Cap-and-trade - California, alone among the fifty states, instituted its multi-industry full-fledged cap-and-trade program auctions in November. All of its allowances for 2013 were sold at a price slightly above the mandated floor price of $10/ton. Regulators and environmental groups hailed the auction as a success; some business groups were less enthusiastic. The California Chamber of Commerce sued the California Air Resources Board to invalidate the auctions. Meanwhile, the Regional Greenhouse Gas Initiative in the northeast continues with its allowances trading at the floor price, and with less than 2/3 of its allowances selling in its August and December auctions. Some commentary concludes that it is time for RGGI to shut down as its CO2 emission goals have been met. From where we sit, RGGI's success or failure can't be judged until its carbon trading is done in connection with a robust economy. The world economic malaise suppresses business, and with it, carbon dioxide emissions. California may face the same issue.

5. National Flood Insurance Program Reform - Could a poisonously partisan Congress vote for this:

(1) IN GENERAL- The Council shall consult with scientists and technical experts, other Federal agencies, States, and local communities to--(A) develop recommendations on how to--(i) ensure that flood insurance rate maps incorporate the best available climate science to assess flood risks; and (ii) ensure that the Federal Emergency Management Agency uses the best available methodology to consider the impact of--(I) the rise in the sea level; ..."?

Not the Congress we know. Or so we thought. Somehow, somewhere, someone put this into a draft, which made it into and out of a committee, ended up on the floor of both houses, survived two votes and came out as an enrolled bill for the president's signature. The president signed it into law in July. This was part of the miscellaneous section of the Moving Ahead for Progress in the 21st Century Act (aka the Transportation and Student Loan Bill), which may explain how this occurred. In any event, climate change considerations are statutorily mandated as part of the NFIP. 42 USC § 4101a(d)(1). We can expect a report by July 6, 2013. Id. § 4101a(d)(1)(B). Who'd have thunk?

6. Global GHG Regulation - COP-18, the Conference of the Parties to the United Nations Framework Convention on Climate Change, wrapped up in Doha, Qatar in the middle of December widely panned as ineffective. While it extended to 2020 the Kyoto Protocol addressing global greenhouse gas emissions, major nations (Canada, Russia, Japan and New Zealand) dropped out, and the United States continued to refuse to participate. Thus, only about fifteen percent of global emissions are now covered by the protocol (the EU and other European nations, as well as Australia, continue to support the protocol). Developing nations (whose emissions are not restricted by Kyoto) had hoped to obtain commitments for funding "climate finance" of $100 billion, but that did not occur either. One can see parallels between the Kyoto Protocol and the Western Climate Initiative and RGGI. In all three members have dropped out and the commitment to address greenhouse gas emissions waivers.

The fiscal cliff was the focus at the end of 2012; climate change got short shrift. 2013 may establish that that was short-sighted.

Arbitrary and capricious. Familiar words to anyone involved in regulatory activity. But also applicable to calendars, which willy-nilly cut off a series of events and ascribe them to one solar cycle, as if the sun gave two hoots. As we perused the various "Climate Change: Year in Review" reviews that crossed our desk last January, we concluded 365 days are arbitrary and one year capricious in assessing what is important to resurrect and re-discuss. We further concluded that a 12-month look-back is too long. So, for what it is worth, here is one of six months.

1. Cap-and-Trade in the U.S. - On January 1 the Western Climate Initiative (WCI) (or what remains of it) initiated its long-anticipated cap-and-trade program for greenhouse gas emissions. Notwithstanding the lack of support from other WCI members, California and Quebec are moving forward with a cap-and-trade program. California's and Quebec's mandated reporting rules applied to stationary sources emitting at or above 25,000 metric tons of CO2e per year. On May 9 coordination between the two programs was announced initiating the 45-day public comment period. The first auction will be held in November and then, on January 1, 2013, enforcement begins when covered entities must participate. It is obviously too soon to tell how successful the California program will be, but when the world's eighth largest economy takes an initiative, it is likely to have impact elsewhere, particularly when it is the only program in the nation.

2. Greenhouse Gas Liabilities and Insurance Coverage - We didn't think there would be anything to say this year about coverage for GHG liabilities. After all, in the only case in litigation the Virginia Supreme Court issued its opinion in AES Corp. v. Steadfast Insurance Co. in September 2011 and concluded that there was no "occurrence" triggering coverage made in the allegations pleaded by the Native Village of Kivalina against AES Corporation. But then the Court granted a motion for reconsideration in January and many puzzled as to what was going on. Apparently nothing as the Court reiterated its previous conclusions in an April 20, 2012 opinion. The decision will be significant in Virginia because it may have upset coverage in more conventional cases, as the concurring opinion of Justice Mims suggests. As for the rest of the nation, it is one decision, on one issue, on one set of facts. The case is important because it is the first, but we will be surprised if it provides guidance anywhere else.

As for greenhouse gas liability that is a story unto itself. Like something out of a Steven King novel, the Comer v. Murphy Oil case refuses to pass quietly into the night. This is the case that was dismissed by the Southern District of Mississippi, reversed by the 5th Circuit, vacated by the 5th Circuit en banc when it accepted rehearing and then reinstated as dismissed when the 5th Circuit's quorum dissolved. Following a denial of a request for a writ of mandamus from the U.S. Supreme Court, the Comer plaintiffs re-filed their complaint against over 100 electric utilities, oil companies, chemical companies and coal companies alleging their GHG emissions were responsible for the ferocity of Hurricane Katrina. And the Southern District of Mississippi dismissed the plaintiffs again on March 20. And plaintiffs appealed again. We don't expect the case to be finally at rest until the Supreme Court denies certiorari, or accepts it (perhaps in order to address the Ninth Circuit's much-anticipated decision in Native Village of Kivalina v. ExxonMobil, which has been pending for over six months since oral argument).

3. Natural Gas: The Bridge Fuel - With the combining of two technologies, hydraulic fracturing and horizontal drilling, a resource of unprecedented volume is "changing the game" of energy. "Annual shale gas production in the US increased almost fivefold, from 1.0 to 4.8 trillion cubic feet between 2006 and 2010. The percentage of contribution to the total natural gas supply grew to 23% in 2010; it is expected to increase to 46% by 2035." Thus reported the Energy Institute at the University of Texas in February in a 400+ page tome entitled Fact-Based Regulation for Environmental Protection in Shale Gas Development. Momentously, the UT researchers report "there is at present little or no evidence of groundwater contamination from hydraulic fracturing of shales at normal depths." The reference to "normal depths" acknowledged that in December 2011 the EPA linked contamination in Pavilion, Wyoming to shallow fracking operations. In March 2012, however, EPA agreed to conduct further testing. And then in May, a personal injury tort case, Strudley v. Antero Resources Corp. et al., No. 2011-CV-2218 (2d Jud. Dist. Ct. Col. May 9, 2012), brought against fracking operators in Colorado was thrown out because plaintiffs could not muster adequate proofs of specific causation. Despite some intense opposition, fracking is moving forward. What does all of this have to do with climate change? Natural gas when burned emits half the carbon dioxide of coal. Accordingly, some argue that natural gas is the bridge to a low-carbon future. If so, then fracking builds that bridge.

4. Innovative Climate Change Legal Theories - Last spring the sound and the fury were intense as the environmental organization Our Children's Trust unleashed several dozen regulatory petitions and a dozen lawsuits across the nation. The goal: establish the public trust doctrine as applicable to the atmosphere and use it to implement greenhouse gas regulation. It appears that all of that is signifying nothing. Over two dozen petitions were denied in 2011 and two lawsuits were dismissed (Montana and Colorado). It did not get any better in 2012. The first six months of this year delivered only bad news to OCT. State courts dismissed lawsuits in Alaska, Arizona, Minnesota, Oregon, and Washington. The federal court in the District of Columbia did the same. Plaintiffs took a voluntary dismissal in California. To be sure, OCT has filed appeals (the one in Minnesota is scheduled to be argued on July 18). Having failed to convince a single court so far, we think we are safe in predicting an uphill battle.

5. Power Plant Performance Standards - On April 13, 2012, a scant seven months before the presidential election, the EPA published in the Federal Register standards of performance for all new fossil fuel-fired electricity-generating units requiring them to meet an electricity-output-based emission rate of 1,000 lb of carbon dioxide for every megawatt-hour of electricity generated. The only plants that can meet this standard without implementing costly carbon capture and storage technology are natural gas plants. Thus, the administration took a strong stand against coal-based generation. Or it is all smoke and mirrors. As EPA notes in the proposed rule, because of the glut of natural gas made available by fracking, there is little likelihood of a new coal-powered plant before 2030. Notwithstanding, industry groups have filed a half-dozen lawsuits seeking to derail the rule.

6. EPA's Greenhouse Gas Regulatory Program - Less than a week ago USEPA and its GHG program got a firm "thumbs up" from the D.C. Circuit. Inundated with over two dozen appeals of various USEPA GHG regulations, the Endangerment Finding, the Tailpipe Rule, the Tailoring Rule and the Timing Rule (for citations see The DC Circuit Locks in USEPAs GHG Regulations Sort Of). The court turned away every challenge, sometimes on the merits and sometimes on procedural grounds such as standing. There is much that deserves comment not the least of which are the differences between the states with California, Connecticut, Delaware, Illinois, Iowa, Maine, Maryland, Massachusetts, New Hampshire, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, and Washington, lining up on one side, and Alabama, Florida, Indiana, Kansas, Kentucky, Louisiana, Nebraska, North Dakota, Oklahoma, South Carolina, South Dakota, Texas, Utah, and Virginia lining up on the other. To focus more on legal matters, several challenges were turned away on standing. For example, neither states nor industry groups could challenge the Tailoring Rule as they did not allege the requisite injury. Because the Tailoring Rule benefits small businesses (who are not required to comply with certain GHG emission requirements), it would appear that the door may remain open for parties who allege competitive injury (i.e., non-regulated entities gain a competitive advantage). In the meantime, do not expect Congress this election year to touch the issue.

NOAA reported that 2011 was one for the record books: 12 weather and climate-related disasters each causing over $1 billion in damage. One might expect (or hope) that a national climate change policy would be coming into place to prevent repeating or setting a new record. One would be disappointed. U.S. climate policy is "uncertain," to quote Michael Morris, CEO of American Electric Power, "dysfunctional" is the word applied by Resources for the Future, "hamstrung" is how the chief UN climate change negotiator and Executive Secretary of the UNFCCC, Christiana Figueres, calls it.

We don't disagree with these viewpoints; they are accurate. But if a response to climate change is the goal, it is worse than these commenters are acknowledging because not only has Congress shown that it is incapable of getting anything done, other avenues are not delivering either. As the year expires we thought it might be helpful to sift through the year's detritus and assess the status of attempts to reduce carbon dioxide emissions, distinct from overt attempts like passing laws and adopting regulations.

1. Tax emissions - Some will remember our blog on the federal lawsuit brought by Mirant Corp. against Montgomery County challenging the County's tax on carbon emissions which fell only on Mirant. The County challenged the federal court's jurisdiction and won before the federal district court. In June, however, the Fourth Circuit reversed. With that Montgomery County folded its tent and abandoned its carbon tax.

2. Favor renewable energy - The inexorable scrutiny of the markets has proved the undoing of several former high-flying renewable energy ventures. Most well-known is the debacle with Solyndra LLC, whose well-publicized collapse generated scrutiny by the FBI and Congress. Others that have failed with less limelight in 2011 include numerous solar companies (Solar Millennium, Stirling Energy Systems, Evergreen Solar, Spectrawatt), as well as ventures in wind (Skycon), energy storage (Beacon Power), and biofulels (Range Fuels).

3. Impose liability for emissions of carbon dioxide - The results here are mixed. Everyone points to American Electric Power v Connecticut for the principle that for greenhouse gas liability claims the federal common law of nuisance has been displaced by federal regulation. They could equally point to Connecticut v AEP before the Second Circuit for the principle that the political question doctrine does not bar these types of claims or to the Fifth Circuit panel in Comer v Murphy Oil USA that held similarly. However, even if the cases are permitted to move forward, they face daunting problems in proof of causation.

4. Force state action to regulate carbon dioxide - We blogged last May and just this month about the tidal wave of litigation unleashed by Our Children's Trust, an Oregon environmental group that had orchestrated a dozen suits asserting the defendant States had an obligation under the public trust doctrine to restrain carbon dioxide emissions, as well as regulatory petitions in about 40 jurisdictions.

Time has not been good to OCT. First, its petitions have been denied by at least 23 agencies (Arkansas, Connecticut, Georgia. Hawaii, Idaho, Illinois, Iowa, Louisiana, Maine, Maryland, Michigan, Nevada, New Hampshire, North Dakota, Ohio, Oklahoma, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, and Wyoming). Where OCT filed lawsuits, three states (Arkansas, Minnesota and New Mexico) responded with motions to dismiss. The lawsuit against Montana was dismissed. In the federal lawsuit, the plaintiffs lost a motion to transfer.

5. Reach regional agreements - With great fanfare the Regional Greenhouse Gas Initiative was launched in 2005. Despite a recent study that claims significant economic benefit to the states in RGGI, its future success is unclear. New Jersey pulled out, New Hampshire tried to leave but the governor vetoed the bill. In New York, there is a court challenge.

6. Voluntarily trade carbon dioxide emissions credits - The only carbon exchange in North America came to an end in 2010 when the Chicago Climate Exchange closed its doors. A shadow of its former self, the CCX now registers verified emission reductions based on a comprehensive set of established protocols.

7. Develop carbon capture and storage - The most prominent project in the US came to a halt in July when American Electric Power concluded not to build a full-scale CCS plant at its Mountaineer, West Virginia plant. As noted above, AEP explained its decision as based on the uncertainty of US climate policy. The lack of direction in American climate change response hurts business. AEP walked away from a $300 million Department of Energy match. It didn't help that the Virginia consumer advocate, in successfully arguing against including CCS costs in the rate base, asserted: “Any potential benefit is speculative and outweighed by the enormous cost of the pilot project.”

Some may think no policy is the best policy. We think otherwise. Climate change is happening. There will be a response. All will benefit if that response is choreographed over time, rather than rushed into when political consensus ultimately concludes that something must be done NOW. Maybe in 2012? Happy New Year.

McCarter & English is pleased to announce that the firm’s ClimateLawyers.com blog has been selected by LexisNexis as one of the Top 50 Blogs for the Environmental Law & Climate Change Community.

McCarter & English LLP is pleased to announce that the firm’s ClimateLawyers.com blog has been selected by LexisNexis as one of the Top 50 Blogs for the Environmental Law & Climate Change Community. The list recognizes preeminent thought leaders in the blogosphere that are creating invaluable content for all segments of the environmental law and climate change practice.

“Most good blogs provide frequent posts on timely topics, but the authors in this year’s collective take their blogs to a different level by providing insightful commentary that demonstrates how blogs can—and do—impact the practice of environmental and climate change law,” said Tracie Morris, Web 2.0 Manager, for LexisNexis in an emailed statement.

ClimateLawyers.com, launched in 2008, is dedicated to the discussion of legal, public policy, and business risk questions presented by climate change and renewable energy initiatives. Authors of the blog include McCarter partners J. Wylie Donald(Wilmington), Francis Kirk (Newark) and Grace Kurdian (New York) of the firm’s Climate Change & Renewable Energy Practice Groupin which Mr. Donald and Ms. Kurdian are co-chairs.

Selection was partly based on commentary submitted to LexisNexis through the online community page which allowed members to share feedback and make suggestions for new blogs to be nominated. After the commentary stage, LexisNexis compiled the final list of nominees and then selected the Top 50 Environmental Law & Climate Change Blogs for 2011. It is expected that LexisNexis will soon put the matter to a vote inviting the online community to pick the Environmental Law & Climate Change “Blog of the Year.”

“We are very pleased to be named to the Top 50 list and appreciate all of the support we’ve received from colleagues and clients in this endeavor,” said Mr. Donald. “Our site has existed for about four years and has a growing readership. As environmental concerns continue to exist in our communities and inside the courtroom, McCarter is working to be at the forefront of the discourse. Our experienced team draws from the firm’s insurance coverage, energy, environmental, tax, real estate, litigation, and intellectual property lawyers to address the myriad legal needs of our clients in these areas. We look forward to continuing a healthy and persuasive conversation about the issues affecting companies and our communities.”

About McCarter & English McCarter & English, established more than 160 years ago, represents Fortune 500 and middle-market companies in their national, regional and local litigation and on important transactions. Its 400 attorneys are based in offices in Boston, Hartford, New York, Newark, Philadelphia, Stamford and Wilmington. http://www.mccarter.com

There was a lot of hype in the papers today about some contest in Dallas with people running around, bumping into each other, dropping balls and otherwise exhaling a lot of greenhouse gases. We contemplated a discussion of the Superbowl but knew you would be more interested in some shameless marketing. So here's where we are: LexisNexis has nominated the blog for the first ever LexisNexis “2011 Top 50 Environmental Law & Climate Change Blogs.” In their words, “For the first time, the LexisNexis Environmental Law & Climate Change Community is honoring a select group of blogs that set the online standard for our practice area,” said Karen C. Yotis, ELCCC Community Manager, in an emailed statement to us.

As some of you may know, we initiated the blog, ClimateLawyers.com, in 2008, in the vanguard of those addressing climate issues in the legal profession. We have focused on not just being a news blog, but instead try to incorporate analysis in everything we post. We like to think that we are succeeding as our readership is consistently growing. The blog is dedicated to the discussion of legal, public policy, and business risk questions presented by climate change and renewable energy initiatives.

LexisNexis has created an online community page to allow members to provide commentary on the list. To show your support of ClimateLawyers.com, please click here.

The deadline for comments is February 14.

And since we promise analysis, here is some. In climate change circles, there has been much written about the conclusions that can be drawn from the hard data. The scientific community is agreed that climate change is occurring. It is also agreed that atmospheric carbon dioxide levels are the highest they have been in thousands and thousands of years. Where the controversy has been is whether one can conclude that anthropogenic carbon dioxide is the cause of climate change. Similarly here. The hard facts are the writings in the various blogs under consideration. There is no dispute that we and our peers labor to churn out our best thoughts. The question, though, is what are those thoughts' significance? And that in turn depends on who is reading, which in turn may depend on whether he or she has found what was in the blog worth reading before. So there is a large amount of serendipity in this blog competition and the ultimate conclusion may depend on exactly what question the judges ask. Be that as it may, if you have positive comments about our writing, we would be grateful if you would let the folks at LexisNexis know. Thanks.

McCARTER & ENGLISH CLIMATE CHANGE AND RENEWABLE ENERGY PRACTICE GROUP

The business case for the development of renewable energy projects, from biodiesel and ethanol to wind, solar, and distributed generation, is more compelling than ever as tax and regulatory incentives combine to attract investments. Emerging issues in environmental law and increasingly recognized principles of corporate social responsibility are encouraging public companies to voluntarily reduce greenhouse gas emissions, install clean energy alternatives, and invest overseas in projects under the Kyoto Protocol to respond to climate change concerns.